Question

# Exercise 6-7 Segmented Income Statement [LO6-4] Shannon Company segments its income statement into its North and...

Exercise 6-7 Segmented Income Statement [LO6-4]

Shannon Company segments its income statement into its North and South Divisions. The company’s overall sales, contribution margin ratio, and net operating income are \$660,000, 42%, and \$13,200, respectively. The North Division’s contribution margin and contribution margin ratio are \$119,600 and 46%, respectively. The South Division’s segment margin is \$64,000. The company has \$105,600 of common fixed expenses that cannot be traced to either division.

Required:

Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales. (Round your percentage answers to 1 decimal place (i.e .1234 should be entered as 12.3).)

#### Homework Answers

Answer #1
 Divisions Total company North South Amount % Amount % Amount % Sales 660000 100.0% 260000 100.0% 400000 100.0% Variable expenses 382800 58.0% 140400 54.0% 242400 60.6% Contribution margin 277200 42.0% 119600 46.0% 157600 39.4% Traceable fixed expenses 158400 24.0% 64800 24.9% 93600 23.4% Territorial segment margin 118800 18.0% 54800 21.1% 64000 16.0% Common fixed expenses 105600 Net operating income 13200
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